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Aggressive Growth

VAALCO Energy analysts continue to raise forecasts for EGY, pushing shares to a Zacks #1 Rank (Strong Buy). The most recent rush of earnings estimate revisions has come on a second-quarter earnings surprise.

The stock has been volatile, but with a single-digit P/E now could be the time to scoop up shares.

Company Description

VAALCO Energy engages in the acquisition, exploration, development, and production of crude oil and natural gas. The company operates both domestically and abroad, on and off shore.

Strong 2011 Continues

On Aug 8 VAALCO reported earnings for the second quarter that piggybacked a solid first quarter. Earnings per share came in at $0.20, 4 cents higher than the Zacks Consensus Estimate and 2 cents better than the second quarter last year.

Revenue was up 74%, to $58.5 million. Much of that was due to substantially higher prices but VAALCO also moved 11% more oil.

Estimates are Surging

The full-year consensus estimate for this year is up 16 cents in the past 2 months to $0.91, 7 cents coming on the surprise. Next year's average forecast is at $1.02, up 21 cents in the past 2 months.

In 2012 VAALCO made $0.65 per share, putting expected growth rates at 39% and 13%, respectively.

The Chart

Energy has fallen out of favor in the recent pull back, but that just creates tremendous value. Shares of EGY are going for less than 7 times forward estimates. Both inflation and growing future demand could push energy prices higher and will take EGY with them. It is risky right now considering the skittish market, but in the long run this should turn out to be a great time to buy this Zacks #1 Rank (Strong Buy).

VAALCO Energy  - ticker EGY>

Bill Wilton is the Aggressive Growth Stock Strategist for He is also the Editor in charge of the Zacks Small Cap Trader service

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